Introduction - Common Size Statements Notes | Study Crash Course of Accountancy - Class 12 - Commerce

Commerce: Introduction - Common Size Statements Notes | Study Crash Course of Accountancy - Class 12 - Commerce

The document Introduction - Common Size Statements Notes | Study Crash Course of Accountancy - Class 12 - Commerce is a part of the Commerce Course Crash Course of Accountancy - Class 12.
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MEANING OF COMMON SIZE STATEMENTS 
Common Size Financial Statements are the statements in which amounts of individual items of Balance Sheet and 
Statement of Profit and Loss for two or more years are written. These amounts are further converted into percentages to 
some common base. 
• Percentage of each individual item shows its relation to its respective total. 
• This analysis is also known as 'Vertical Analysis'. 
• Common Size statements express all items of a financial statement as a percentage of some common base such as 
Revenue from Operations for Statement of Profit and Loss and total assets and total liabilities for Balance Sheet. 
 
COMMON SIZE BALANCE SHEETS 
Common Size Balance Sheet is a statement in which each asset is expressed as percentage to Total Assets and each 
liability is expressed as percentage to Total Equity and Liabilities. Total Assets or Total Equity and Liabilities are taken as 
100 and all the figures are expressed as percentage of the total. 
 
Objectives of Common Size Balance Sheet 
• To analyse changes in individual items of balance sheet. 
• To establish the trend of different items of assets, equity and liabilities. 
• To assess the financial soundness and financial strategy. 
 
Format of Common Size Balance Sheet 
COMMON SIZE BALANCE SHEET as at.... 
Particulars Not
e 
No. 
Absolute Amounts Percentage of Balance 
Sheet Total 
  Previous 
Year (Rs.) 
Current 
Year (Rs.) 
Previous 
Year (%) 
Current 
Year(%) 
I. EQUITY AND LIABILITIES      
1. Shareholders' Funds      
(a) Share Capital  ... ... ... ... 
(b) Reserves and Surplus  ... ... ... ... 
2. Non-Current Liabilities      
(a) Long-term Borrowings  ... ... ... ... 
(b) Long-term Provisions  ... ... ... ... 
3. Current – Liabilities      
(a) Short-term Borrowings  ... ... ... ... 
(b) Trade Payables  ... ... ... ... 
(c) Other Current Liabilities  ... ... ... ... 
(d) Short-term Provisions  ... ... ... ... 
Total    100 100 
II. ASSETS      
1. Non-Current Assets      
(a) Fixed Assets      
(i) Tangible Assets  ... ... ...... ... 
(ii) Intangible Assets  ... ... ... ... 
(b) Non-Current Investments  ... ... ... ... 
(c) Long-term Loans and Advances  ... ... ... ... 
2. Current Assets      
(a) Current Investments  ... ... ... ... 
(b) Inventories  ... ... ... ... 
(c) Trade Receivables  ... ... ... ... 
(d) Cash and Cash Equivalents  ... ... ... ... 
(e) Short-term Loan and Advances  ... ... ... ... 
(f) Other Current Assets  ... ... ... ... 
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MEANING OF COMMON SIZE STATEMENTS 
Common Size Financial Statements are the statements in which amounts of individual items of Balance Sheet and 
Statement of Profit and Loss for two or more years are written. These amounts are further converted into percentages to 
some common base. 
• Percentage of each individual item shows its relation to its respective total. 
• This analysis is also known as 'Vertical Analysis'. 
• Common Size statements express all items of a financial statement as a percentage of some common base such as 
Revenue from Operations for Statement of Profit and Loss and total assets and total liabilities for Balance Sheet. 
 
COMMON SIZE BALANCE SHEETS 
Common Size Balance Sheet is a statement in which each asset is expressed as percentage to Total Assets and each 
liability is expressed as percentage to Total Equity and Liabilities. Total Assets or Total Equity and Liabilities are taken as 
100 and all the figures are expressed as percentage of the total. 
 
Objectives of Common Size Balance Sheet 
• To analyse changes in individual items of balance sheet. 
• To establish the trend of different items of assets, equity and liabilities. 
• To assess the financial soundness and financial strategy. 
 
Format of Common Size Balance Sheet 
COMMON SIZE BALANCE SHEET as at.... 
Particulars Not
e 
No. 
Absolute Amounts Percentage of Balance 
Sheet Total 
  Previous 
Year (Rs.) 
Current 
Year (Rs.) 
Previous 
Year (%) 
Current 
Year(%) 
I. EQUITY AND LIABILITIES      
1. Shareholders' Funds      
(a) Share Capital  ... ... ... ... 
(b) Reserves and Surplus  ... ... ... ... 
2. Non-Current Liabilities      
(a) Long-term Borrowings  ... ... ... ... 
(b) Long-term Provisions  ... ... ... ... 
3. Current – Liabilities      
(a) Short-term Borrowings  ... ... ... ... 
(b) Trade Payables  ... ... ... ... 
(c) Other Current Liabilities  ... ... ... ... 
(d) Short-term Provisions  ... ... ... ... 
Total    100 100 
II. ASSETS      
1. Non-Current Assets      
(a) Fixed Assets      
(i) Tangible Assets  ... ... ...... ... 
(ii) Intangible Assets  ... ... ... ... 
(b) Non-Current Investments  ... ... ... ... 
(c) Long-term Loans and Advances  ... ... ... ... 
2. Current Assets      
(a) Current Investments  ... ... ... ... 
(b) Inventories  ... ... ... ... 
(c) Trade Receivables  ... ... ... ... 
(d) Cash and Cash Equivalents  ... ... ... ... 
(e) Short-term Loan and Advances  ... ... ... ... 
(f) Other Current Assets  ... ... ... ... 
 
     
 
Total    100 100 
 
P.Y (%)=                                         .       X   100 
              Total of assets or liabilties of p.y.  
C.Y (%)=                                         .       X   100 
Total of assets or liabilties of C.y.  
 
COMMON SIZE STATEMENT OF PROFIT AND LOSS 
In Common Size Statement of Profit and Loss, Revenue from Operations (Net Sales) is taken as 100 and all other variables 
of income statement are expressed as percentage of Revenue from Operations. 
• It helps to determine the relationship between Revenue from Operations and other expenses. 
• It may be prepared either for different periods or for two firms. 
 
Objectives of Common Size Statement of Profit and Loss 
 (i) To establish relationship among various components of Statement of Profit and Loss with revenue from operations. 
(ii) To study the trend in different items of Incomes and Expenses. 
(iii) To assess the efficiency. 
 
Format of Common Size Statement of Profit and Loss 
COMMON SIZE STATEMENT OF PROFIT AND LOSS 
for the years ended.... and.... 
Particulars Note No. Absolute Change Percentage of 
Revenue from  
Operation  
 
 
  Previous 
Year(Rs.) 
Current Year 
(Rs.) 
Previous Year(%) Current Year(%) 
I. Revenue from Operations    100 100 
II. Other Income  .... .... .... .... 
III. Total Revenue (I + II)  .... .... .... .... 
IV. Expenses      
(a) Cost of Materials Consumed  .... .... .... .... 
(b) Purchases of Stock-in-Trade  .... .... .... .... 
(c) Changes in Inventories of Finished Goods,  .... .... .... .... 
Work-in-Progress and Stock-in-Trade  .... .... .... .... 
(d) Employees Benefit Expenses  .... .... .... .... 
(e) Finance Costs  .... .... .... .... 
(f) Depreciation and Amortisation Expenses  .... .... .... .... 
(g) Other Expenses  .... .... .... .... 
V. Total Expenses    .... .... 
VI. Profit before Tax (III-V) .... .... .... .... .... 
Less: Tax .... .... .... .... .... 
VII. Profit after Tax .... .... .... .... .... 
 
P.Y (%)=                                         .       X   100 
              Revenue from operations  of p.y.  
C.Y (%)=                                         .       X   100 
              Revenue from operations  of C.y.  
 
 
 
 
 
 
 
 
 
 
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